Alger, an investment management firm, published its “Alger Mid Cap Focus Fund” third quarter 2021 investor letter – a copy of which can be downloaded here. During the third quarter, the largest portfolio sector weightings were Information Technology and Health Care. The largest sector overweight was Industrials. The portfolio had no exposure to the Utilities or Energy sectors and negligible exposure to the Real Estate and Materials sectors. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.
Alger, in its Q3 2021 investor letter, mentioned Pinterest, Inc. (NYSE: PINS) and discussed its stance on the firm. Pinterest, Inc. is a San Francisco, California-based image-sharing service provider with a $39.5 billion market capitalization. PINS delivered a -11.90% return since the beginning of the year, while its 12-month returns are up by 9.55%. The stock closed at $58.06 per share on October 22, 2021.
Here is what Alger has to say about Pinterest, Inc. in its Q3 2021 investor letter:
“Pinterest is an image sharing and social media service designed to help consumers discover product information and save the information on the internet using images and, on asmaller scale, animated GIFs and videos, in the form of Pinboards. The company shows consumers visual recommendations, called Pins, based on their personal tastes and interests. Pinterest provides advertisers with information on consumer activities, such as becoming inspired by images, as well as other points along the sales funnel, which is the process in which potential customers become purchasers of products. Shares of Pinterest underperformed after the company reported a larger-thanexpected decline in monthly active users (MAU) and provided guidance for the third quarter that included revenue growth of 40%, which was in line with consensus. Management didn’t provide MAU guidance for the third quarter due to engagement headwinds. These headwinds resulted from the economy reopening, which means consumers may spend less time online because they are commuting and venturing out for shopping, entertainment and social events. We believe the company appears to be losing its pandemic tailwinds that involved increased online shopping. We have sold the position.”
Photo by Souvik Banerjee on Unsplash
Based on our calculations, Pinterest, Inc. (NYSE: PINS) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. PINS was in 63 hedge fund portfolios at the end of the first half of 2021, compared to 83 funds in the previous quarter. Pinterest, Inc. (NYSE: PINS) delivered a -24.51% return in the past 3 months.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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Disclosure: None. This article is originally published at Insider Monkey.
